Focus On

IMPLIED DUTIES OF EMPLOYEE - Fiduciary duties

Wednesday, May 02, 2018 @ 8:41 AM  


Lexis Advance® Quicklaw®
Appeal by the defendant former employer from a summary judgment award on the respondent's claim for breach of contract. The respondent was an engineer. He was employed by the appellant for a period of 10 years ending in 2015 and had attained the position of vice president. During his employment, the respondent acquired shares in the appellant. Prior to resigning, the respondent sold his shares to the appellant for $891,820. The price was to be paid in 10 annual installments plus interest on the outstanding balance. The respondent received the first payment before he resigned. In 2016, the plaintiff became the CEO of a rival engineering firm. Five of the appellants' employees resigned and joined the respondent's firm at their own instigation and without enticement from the respondent. The appellant refused to pay any further installments on the grounds that the respondent breached his fiduciary duties. The respondent commenced a claim for the amounts owing and brought a claim for summary judgment. The judge allowed the claim. He found that the respondent had a fiduciary relationship with the appellant, but that he had not breached his fiduciary duties or the share ownership agreement and he had not used any confidential or proprietary information from the defendant. He found that there was nothing improper or unfair in the respondent's recruitment of the appellant's employees. The judge concluded that the appellant repudiated its contract to pay the respondent for the shares and found that the respondent was entitled to the present value of the shares, being $750,000. The appellant appealed arguing that the motion judge erred in finding that the respondent had not breached his fiduciary duty and did not use confidential information and that a discount rate of between six and eight per cent was appropriate.

HELD: Appeal dismissed. The motion judge's conclusion that the respondent did not breach any fiduciary duty he owed to the appellant was supported by the evidence. There was nothing in the evidence that suggested a need for further investigation or testimonial evidence. There was no genuine issue for trial and breach of fiduciary duty was not a special category that was not amenable to summary judgment where no genuine issue for trial was raised. Furthermore, there was nothing in the record that indicated that there was other relevant evidence that could have affected the result.

Cosolo v. Geo. A. Kelson Ltd., [2018] O.J. No. 1668, Ontario Court of Appeal, K.N. Feldman, G.I. Pardu and M.L. Benotto JJ.A., March 28, 2018. Digest No. TLD-April302018006